Deck 13: Activating and Maintaining an Effective Compensation System

Question 1

Why is a bottom-up approach for compensation budgeting favoured by the textbook author?

A) For its simplicity.
B) It supports the strategic pay notion.
C) It ensures strategy fits with other strategic aspects of the organization.
D) It is more compatible with new human resource information systems.

Answer 1

B

Question 2

This term is used to describe responsibilities such as keeping track of who is entitled to what,ensuring the proper payouts are made,calculating gross earnings and deductions,and preparing and distributing pay cheques and remittances:

A) compensation administration
B) outsourcing
C) compensation budgeting
D) implementation plan

Answer 2

A

Question 3

Which of the following aspects is not considered part of documenting the compensation system?

A) briefing managers on compensation issues
B) preparing job evaluation manuals
C) negotiating and drawing up service provider contracts
D) recording assigned responsibilities for carrying out various compensation processes

Answer 3

A

Question 4

Payroll was one of the last functions to be computerized in most organizations.

Question 5

In evaluating a new compensation system,a key issue is the time period that should be used.

Question 6

In order to avoid resistance to a new compensation system,it is best to restrict the amount of information provided as much as possible.

Question 7

In the bottom-up approach to compensation budgeting,an arbitrary amount is allocated to compensation and given to department managers for distribution to their employees.

Question 8

This legislation requires that no "personal health information",such as employee medical and dental claims information,can be released to anybody without informed employee consent:

A) Bill 88
B) PIPEDA
C) ADP
D) EDS

Question 9

Which of the following is not a component of compensation administration?

A) collecting the necessary information
B) performing pay calculations
C) establishing accountability
D) preparing and distributing remittances

Question 10

Documenting the compensation system is a key step in preparing for implementation.

Question 11

There are two approaches to compensation administration: doing it all in-house or outsourcing it.

Question 12

In regard to the use of information technology in compensation,which of the following is false?

A) It should be used to assist job documentation
B) It can transform flexible benefits plans from an impractical concept to a useful one
C) It should assist in labour market data analysis
D) It should be used to provide full access by supervisors to employee records

Question 13

What is a major issue for most organizations when planning for information technology?

A) whether to use computers
B) whether to use consultants
C) how advanced the system should be
D) whether to protect employee privacy

Question 14

Planning the infrastructure for compensation administration includes developing ongoing communication processes.

Question 15

What budget approach are you using by applying the compensation rates to employees,factoring in probable merit and seniority increases as well as expected turnover?

A) zero based
B) top-down
C) bottom-up
D) break-even

Question 16

According to a recent survey of HR professionals,what is the predominant use of human resources management systems?

A) planning and research
B) time and attendance
C) payroll
D) benefits

Question 17

The final step in implementing a new compensation system is communicating the system.

Question 18

Which of the following is not an appropriate use for computers?

A) computing market lines and pay policies
B) determining the relative value of jobs
C) labour market data analysis
D) online surveys of employee attitudes

Question 19

In evaluating a new compensation system,two main sets of employee attitudes should be examined - job attitudes and compensation attitudes.

Question 20

Information technology is particularly useful for pay and remittance calculations.

Question 21

Which of the following is not a key factor that needs to be considered when deciding whether to outsource?

A) company size
B) internal capabilities
C) vendor relationship challenges
D) the strategic importance of compensation

Question 22

Which of the following situations may account for higher-than-budgeted compensation expenditures?

A) initial dip
B) spiral career paths
C) job evaluation system
D) excessive accumulation

Question 23

Which of the following groups is not considered a key part of the training plan for implementation of a new compensation system?

A) key support people in HR department
B) managers and supervisors
C) those who have role in operating the system
D) all employees covered by the new system

Question 24

Why is it useful to conduct surveys of key employee attitudes before system implementation?

A) To provide information about the new system
B) To have a baseline for future comparisons
C) To solicit recommendations for changes
D) To create perception of employee involvement

Question 25

Compared to last year's high school grades,your marks declined during the first semester of university. What phenomenon has taken place?

A) socialization
B) initial dip
C) integration
D) freedom to act

Question 26

Compared to last year's results you have determined an increase in your compensation cost ratio.What does this tell you?

A) This is a sign of greater productivity.
B) Managers have inconsistently applied the new system.
C) The typical employee is earning more money.
D) Noncompensation costs have increased.

Question 27

What main indicators should firms examine in the process of examining compensation costs?

A) budgeted costs and actual costs
B) compensation cost ratios and budget ratios
C) net profit per employee and average employee earnings
D) compensation cost ratios and average employee earnings

Question 28

A good employee threatens to leave your firm because she has received a higher pay offer from a competitor.The offer is well outside your company's pay range for the job the employee is performing.What should you tell the employee?

A) You will match the other offer.
B) You will beat the other offer, to be sure you won't lose her.
C) You will try to get her job put into a higher pay grade.
D) You wish her all the best in her new job at the competitor.

Question 29

Which of the following actions is not a way to contain compensation costs?

A) Enact a hiring freeze.
B) Contain benefit costs.
C) Replace some raises with bonuses.
D) Replace variable pay with fixed pay.

Question 30

In regard to evaluating the compensation system,which of the following is false?

A) Most organizations don't even try to evaluate their systems.
B) A slipshod attempt at evaluation may do more harm than good.
C) Compensation costs below budgeted levels should make you happy.
D) If the budget was not realistic in the first place comparisons are meaningless.

Question 31

As a small firm business owner,which of the following is a valid concern you may have about the outsourcing of benefits administration?

A) You may not be able to spend more time on strategic pay practices.
B) You may lose touch with emerging problems and issues.
C) Training costs will be higher.
D) Employees do not want their personal information shared with an outside provider.

Question 32

In regard to compensation communication,which of the following is false?

A) Employers may be found legally liable for poor benefits communication.
B) Two types of ongoing compensation communication are important.
C) There are new guidelines on employer duties for educating pension plan members.
D) One problem is that employees who understand their compensation system are less satisfied with it.

Question 33

As a result of focusing your recruitment efforts on attracting recent university graduates your workforce has become younger. What impact does this change have on your compensation system?

A) greater focus on pension plans and retirement income
B) offer more cash and family benefits
C) adopt job evaluation system
D) adopt new managerial strategy

Question 34

Which of the following is not one of the steps in implementing the compensation system?

A) Establish the implementation task forces.
B) Decide on the compensation level.
C) Test the system.
D) Conduct the training.

Question 35

Which of the following is not considered a way to evaluate the impact of the compensation system?

A) impact on compensation objectives
B) impact on compensation costs
C) impact on employee behaviours and attitudes
D) impact on key strategies

Question 36

Which of the following is not a key aspect of developing the implementation plan?

A) the training plan
B) preparing the compensation budget
C) the plan for communicating the new system
D) the plan for evaluating the new system

Question 37

Which of the following is not an indicator of membership behaviour?

A) number of applicants job postings attract
B) number of useful employee suggestions submitted
C) absenteeism
D) employee turnover

Question 38

What aspect of compensation management is most neglected?

A) evaluating the compensation system
B) keeping employees informed
C) ensuring employee privacy rights
D) budget planning

Question 39

Which of the following is not an external circumstance that can trigger the need to change the compensation system.

A) labour market changes
B) legislative and tax changes
C) changes in economic conditions
D) business strategy changes

Question 40

Which of the following is true of outsourcing compensation administration?

A) Most organizations outsource at least some aspect of their benefits administration.
B) It has been gaining momentum in recent years.
C) It is generally an all-or-nothing proposition.
D) New human resources information systems make it more likely.

Question 41

Identify the four key aspects that need to be considered in planning the infrastructure for compensation administration.

Question 42

Identify and describe the steps necessary for implementing a compensation system.

Question 43

What are the primary areas of computer applications in a compensation system?

Question 44

Identify the tasks involved in preparing to implement a compensation system.

Question 45

Discuss the advantages and disadvantages of outsourcing compensation administration,as well as the factors involved in deciding outsourcing policy.